TMI Blog2017 (3) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... to do with the requirement of sub-section (8) of section 5. It is the consideration for the time value of money which is mercifully missing in the transaction in hand. The classical transaction which would cover the definition of financial debts is illustrated in sub-clause (a) of sub-section (8) of Section 5 i.e. the money borrowed against the payment of interest. Learned Counsel of Applicants has not been able to show from any material on record or otherwise that it is a financial transaction in which a debt has been disbursed against the consideration for the time value of money and he being the Financial Creditor is entitled to trigger the insolvency process against the Respondent in accordance with Section 7 of the IBC. Even otherwise the present petition would not be maintainable as many winding up petitions have been filed before Hon'ble Delhi High Court. Even the Official Liquidator has been appointed as a provisional liquidator although the matter is presently pending before the Appellate Bench with interim directions. As a sequel to the above discussions, we are unable to persuade ourselves to accept that the applicants are covered by the expression "Financial Credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng, promoting and developing commercial and residential properties, office spaces etc. A true typed copy of its Memorandum of Association has been placed on record (Annexure-A). 3. Applicant Nos. 3 and 4 booked two Office spaces measuring 1000 sq.ft. in their respective names under the project known as Kessel-I - Valley and executed Memorandum of Understanding dated 12.07.2007. It is alleged that the Memorandum of Understanding was lost by the Respondent with a mala fide intention and some ulterior motive. In its place, a new Memorandum of Understanding was sent to the petitioners for signature which had terms and conditions different than the one originally agreed between the parties. As a consequence, the applicants refused to sign the new Memorandum of Understanding and demanded refund of the amount paid by them to the Respondent. The applicants then substituted their booking in the project called I- Mall which had shops and other commercial units. It required further investment to purchase a unit in the l-Mall project. Accordingly, a fresh Memorandum of Understanding dated 17.10.2012 was executed and unit No.E-06 measuring about 1101 sq.ft. was allotted to the applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lat measuring 550 sq.ft. on the 4th Floor for a consideration amount of ₹ 7,24,000/-. A sum of ₹ 5,80,000/- was paid by the Applicant No.1 to the Respondent at the time of booking and the remaining amount of ₹ 1,44,000/-was to be paid at the time of delivery of possession which included Club charges, EFC charges, EEC charges and IFMS charges. A Memorandum of Understanding was executed between the parties on 20.08.2009 with detailed terms and conditions. According to the terms of the MOU, construction of the fully-furnished flat was to be completed on or before July 2011. Before the offer of possession, a sum of ₹ 12,000/- as Assured Returns each month was required to be made with effect from August 2009. 6. After the execution of various Memorandum of Understandings, the Respondent started paying the monthly Assured Returns to the applicants although erratically. It is alleged that the cheques issued by the Respondent was dishonoured for the reasons, inter alia, of insufficient funds. The last cheque issued for Assured Returns credited in the account of the Applicant No.1, Applicant Nso. 2 and 3 for their respective unit was on 11.01.2014 in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licant answers the description of Financial Creditor and Financial Debt in terms of the aforesaid provision of the Act, it would be profitable to read the provisions of Sections 5(7) (8) and Section 7 of IBC which are set out below:- '5. Definitions: In this Part, unless the context otherwise requires,- 7. financial creditor means any person to whom a financial debt is owed and includes a person to whom such debts has been legally assigned or transferred to; 8. financial debt means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes- (a) money borrowed against the payment of interest; (b) any amount raised by acceptance under any acceptance credit facility or its dematerialised equivalent; (c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; (d) the amount of any liability in respect of any lease or hire purchase contract which is deemed as a finance or capital lease under the Indian Accounting Standards or such other accounting standards as may be prescribed; (e) receivables sold or disco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Sections 5(7) and 5(8) of the IBC which are relevant to the issue raised. Section 5(7) of IBC defines the expression Financial Creditor and Section 5(8) of IBC defines the expression Financial debt which has been used in Section 5(7) of IBC. 12. A perusal of definition of expression 'Financial Creditor' would show that it refers to a person to whom a Financial debt is owed and includes even a person to whom such debt has been legally assigned or transferred to. In order to understand the expression 'Financial Creditor', the requirements of expression 'financial debt' have to be satisfied which is defined in Section 5(8) of the IBC. The opening words of the definition clause would indicate that a financial debt is a debt along with interest which is disbursed against the consideration for the time value of money and it may include any of the events enumerated in sub-clauses (a) to (i). Therefore the first essential requirement of financial debt has to be met viz. that the debt is disbursed against the consideration for the time value of money and which may include the events enumerated in various sub-clauses. A Financial Creditor is a person who has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Relating to IBC, 2016 by Vinod Kothari Sikha Bansal) When we examine the nature of transactions in the present case, we find that it is a pure and simple agreement of sale or purchase of a piece of property. The agreement to sell a flat or office space etc. Merely because some assured amount of return has been promised and it stands breached, such a transaction would not acquire the status of a 'financial debt' as the transaction does not have consideration for the time value of money, which is a substantive ingredient to be satisfied for fulfilling requirements of the expression 'Financial Debt'. 13. Essentially in the case in hand 'Assured Returns' is associated with the delivery of possession of the aforementioned properties and has got nothing to do with the requirement of sub-section (8) of section 5. It is the consideration for the time value of money which is mercifully missing in the transaction in hand. The classical transaction which would cover the definition of financial debts is illustrated in sub-clause (a) of sub-section (8) of Section 5 i.e. the money borrowed against the payment of interest. Learned Counsel of Applicants has not been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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